Risk sentiment soured on Tuesday, as global recession fears mounted, propping up safe-haven assets and pushing down cryptocurrency prices. A massive energy crisis is threatening Europe, following Russia’s announcement that the Nord Stream 1 gas pipeline would be offline indefinitely.
Risk sentiment has been low over the past few weeks on rising odds of a steep Fed rate hike in September. Severe rate hikes stifle economic activity, putting pressure on cryptocurrencies. Markets are pricing in a Fed rate hike of at least 50 bp in September, with odds in favor of a 75 bp hike.
Rising prospects of aggressive economic tightening are also weakening stock markets. The decline of stock markets has pushed cryptocurrency prices down, as crypto markets have been following stock market trends.
Bitcoin traded collapsed below the key $20,000 level support and the $19,200 level support on Tuesday, falling to $18,700. Further support can be found at the $17,600 level representing the yearly low, while resistance may be encountered near $20,500 and further up at $21,800.
Ethereum started the day strong, rising above the $1,640 resistance but then pared its gains, plummeting to $1570. If Ethereum's price declines, it may encounter support near $1,550 and further down at $1,420. If the Ethereum price rises, resistance may be encountered near $1,640 and higher up to $1,720.
Ethereum has gained support this week on reports that Ethereum main net merge will begin on September 6th. Ethereum Classic, a hard fork of Ethereum, hit an all-time high hash rate on Monday.
Ethereum price has been boosted in anticipation of the so-called ‘merge’, which will pass through a series of phases in the next couple of weeks and is expected to be finalized on September 19th. The Merge from the Proof-of-Work to the Proof-of-Stake method will be a significant network upgrade that is expected to lead to an increase in demand for Ethereum.
BTC/USD 1h Chart
ETH/USD 1h Chart
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